Factory activity in China failed to pick up strongly following the Chinese New Year festival period, confirming worries of an economic slowdown.

Official data, which focuses on larger state-owned companies, showed that activity in the manufacturing sector picked up marginally in March. The government's purchasing managers' index (PMI) rose to 50.3 from February's eight-month low of 50.2, signalling that activity grew at a slightly faster pace. slight pick-up in activity in March.

A survey by HSBC and Markit, which focuses more strongly on the private sector, indicated that activity slowed further last month. The PMI fell to 48 from 48.5, suggesting that smaller manufacturers are feeling the brunt of the economic slowdown in China.

Hongbin Qu, chief China economist at HSBC said the survey "confirmed the weakness of domestic demand conditions" and warned that the figures suggest that first quarter growth fell below the annual growth target of 7.5pc.

"We expect Beijing to fine-tune policy sooner rather than later to stabilise growth."

Julian Evans-Pritchard, China economist at Capital Economics, however said that while the manufacturing figures were "subdued" that "it has held up better than many had feared".

HSBC's survey also showed that new orders fell in March, suggesting that activity will continue to slow.

"We're still in a subdued part of the cycle," said Louis Kuijs, chief China economist at the Royal Bank of Scotland.

"I still don't think the downward pressures are tremendous, but they are large enough for the government to really start to talk about the need to support growth."

Last week Li Keqiang, Chinese premier, said the necessary policies were in place to support economic growth, including plans to increase infrastructure investment. He has pledged to achieve economic growth of 7.5pc for 2014, the same pace as 2013. While this is still an enviable rate for the developed economies, it represents a slowdown for China, where annual growth has run to double digits for much of the last decade. Mr Li has expressed that he is content with slower, but more sustainable growth.